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Effects of Taxes and Inflation
When investing, it is important to factor in the effect that taxes and inflation may have on your return.
Using historical returns for stocks, bonds and cash this chart illustrates what an investor’s real rate of return might look like after the effects of taxes (using a 30% tax rate) and inflation (using the historical Consumer Price Index4).
Investing in a tax-deferred investment vehicle, such as an Individual Retirement Account (IRA), and/or an employer sponsored retirement plan, like a 401(k), can help reduce the impact of taxes.
Starting early and investing regularly may help combat the effects of inflation and ensure that your nest egg has the potential to afford today’s standard of living at tomorrow’s prices.
A professional investment consultant can help you estimate the effect that taxes and inflation may have on your portfolio.
Past performance is no guarantee of future results. This chart is for illustrative purposes only and does not represent the performance of any specific Cavanal Hill Fund.
1Stocks are represented by the Standard & Poor’s 500 Index, an unmanaged index generally representative of the U.S. Stock Market.
2Bonds are represented by the U.S. Long-Term Government Bond Index, an unmanaged index generally representative of the long-term U.S. bond market.
3Cash Equivalents are represented by the U.S. 30-Day Treasury Bill an unmanaged index generally representative of the rate of return on a savings investment.
Government bonds and T-bills are guaranteed by the U.S. Government and offer a fixed rate of return and principal value of held to maturity. Investors cannot invest directly in any index, although they can invest in the underlying securities.
Inflation: is represented by the Consumer Price Index, an approximate indicator for inflation, adjusted for each year.
Please consult your tax advisor concerning your personal tax status.
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